In Kentucky, can I run a credit check on an applicant for employment or on existing employees?


April 26, 2022

By:  Matthew C. Smith

In Kentucky, can I run a credit check on an applicant for employment or on existing employees? Yes, but you must do so uniformly and comply with the Fair Credit Reporting Act (“FCRA”) and the guidance provided by the Equal Employment Opportunity Commission (“EEOC”).

The Fair Credit Reporting Act (“FCRA”) imposes restrictions on employers who obtain a “consumer report” regarding an applicant or employee from a “consumer reporting agency.” The FCRA imposes the following three requirements on employers who obtain a “consumer report” from a “consumer reporting agency” for employment purposes.

Before obtaining a consumer credit report, the employer must disclose, in writing, to the applicant or employee that such a report may be obtained and must obtain the individual’s written consent. The document must be a stand-alone document that is separate and apart from all other employment documents. See 15 U.S.C. § 1681b(b)(2).

Before denying a job application, reassigning or terminating an employee, or denying a promotion against an applicant or employee based, in whole or in part, on a consumer report, the employer must first send a notice to the individual telling him/her that such an action is contemplated and provide the employee a copy of the consumer report and an opportunity to correct any errors in the report before the adverse action becomes final. The employer must also provide a summary of the individual’s rights under the FCRA, in the form prescribed by the FTC.

Once the preliminary adverse action has been made final, the employer must notify the individual, orally or in writing, that the adverse action has been made final and must provide the individual with the name, address, and phone number of the consumer reporting agency that prepared the report and a statement that (1) the employer, not the agency, made the adverse decision regarding the individual, (2) the individual has the right to a free copy of the consumer report, and (3) the individual has the right to dispute the accuracy or completeness of the information contained in the consumer report. See 15 U.S.C. §1681m(a).

The FCRA prohibits a background screening company from reporting, and an employer from using, the following: bankruptcy cases that predate the report by more than 10 years; paid tax liens that predate the report by more than 7 years; accounts placed for collection that predate the report by more than 7 years; civil suits and civil judgments that predate the report by more than 7 years; and any other adverse information that predates the report by more than 7 years.

In determining to take adverse action, and employer must also be mindful of Title VII of the Civil Rights Act of 1964 (Title VII), as amended, 42 U.S.C. § 2000e et seq. The EEOC holds that taking adverse action against an applicant or employee based on a credit report may be unlawful unless it is job related and consistent with a business necessity.


This blog is not legal advice and is not intended to be legal advice. Should you have any questions regarding the subject matter, please contact Matthew C. Smith, Esq., at Ziegler & Schneider, P.S.C., (859) 426-1300, for additional information.

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